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More than 80% of investment managers now believe that companies with no sustainability risk in the supply chain will lose their share price. Meanwhile, seven in ten believe companies need to accelerate purpose-built initiatives to ensure long-term profitability.

To be “purpose-driven,” an organization needs to stand for something that it believes in, wants to go beyond profit and make a positive impact on society – something that is becoming increasingly popular with consumers. There is growing evidence that consumers around the world want companies to take a stand on issues such as sustainability, transparency and fair employment practices. Even so, companies remain hesitant on this front.

Concerns about short-term profitability regularly hamper leaders in ESG transformation efforts. While companies are increasingly willing to talk about topics like climate change, this is reflected in a study by PwC which found that only 38% of board members believe that ESG issues have a financial impact on a company.

However, “talking the talk” without “walking the walk” may no longer be an option. Investors are steadily moving sustainability to the top of their own agendas – and companies that fail to meet consumer ESG expectations may have a harder time attracting new donors.

This is also confirmed by new studies by the Proxima purchasing consultancy. The company surveyed 1,000 investment managers around the world and found that 85% now believe that companies that fail to implement sustainability initiatives in the supply chain will see share prices decline over the next decade as a result. This is something that investors won’t be positive about trying to make profits by helping companies grow – and another 84% said they were concerned about inaction and said they had issues with supply chain sustainability and ESG standards pose a risk to investments.

This trend will only continue and dominate the next decade – while supply chains will be at the center of expected change. A majority of 88% of investment managers said supply chain sustainability standards will be a key criterion for investment decisions over the next decade, while 70% added that companies should accelerate their purpose initiatives at the expense of short-term profitability.

The increasing control of supply chains by investors is already making itself felt. In the US, Proxima found that nearly 40% of investors often discuss supply chain standards in the companies they already invest in. While that number is slightly lower in the UK, the number of those who sometimes debate it suggests that the US will grow to US levels in the years to come – and firms that don’t count on it might be paying the price counting.

Simon Geale, Executive Vice President at Proxima, said, “It is important that a company brings the expertise to the table to meet the challenge… It is clear that investors are looking at supply chain sustainability when we do one Want to build better post-pandemic. ”World… The concept of how a business can create value is changing, and business leaders are trying to balance short-term gains with advancing a wider range of ESG factors that create sustainable value over the medium term. “

While supply chains can be complex, Proxima also found that if companies want to act quickly, they can take a first-mover advantage. More than nine in ten investment managers said they would keep investing in a company to make sure it adheres to ESG standards across its supply chain.